Why Is Bitcoin Legal in the Us

    0
    33

    In just two years, The Silk Road had earned more than $1.3 billion in Bitcoin. The FBI feared that much of this revenue was the result of money laundering, triggering the anonymity of the Bitcoin debate. In the same year, FinCEN declared that Bitcoin was not legal tender. The U.S. Senate has also sent letters warning law enforcement of threats posed by digital assets. However, citizens who already own cryptocurrency are legally allowed to hold it. The CFTC has defined Bitcoin as a “commodity” and its efforts are primarily focused on monitoring the cryptocurrency futures market, a specific type of derivatives market that allows investors to speculate on the price without actually buying the underlying commodity. The agency has also assumed responsibility for investor protection and has filed lawsuits involving several Bitcoin-related systems. Mainly due to the fragmentation of the legal system in the US, the situation regarding Bitcoin is uneven; There are countless laws, and they vary from state to state.

    Some countries, such as India, Bolivia, and Ecuador, have made Bitcoin completely illegal. The Reserve Bank of India (RBI) banned local businesses from managing cryptocurrencies in 2018, saying they were not legal tender and no company could have a “relationship” with it. The ban lasted two years, until March 2020, when the RBI lifted it. Thus, trading Bitcoin and cryptocurrency is now legal, but initial coin offerings and asset funds are still illegal. The United States of America is no exception, not least because it consists of a patchwork of states, each with its own laws. For example, Bitcoin trading is legal in some places, while in others the practice is questionable. But the relative flexibility of U.S. regulators has still attracted most of the industry`s innovation to date. For individuals, buying and selling Bitcoin is legal in all US states. However, since Bitcoin is not legal tender, individuals and businesses do not have to accept it as payment.

    (In some states, lawmakers have introduced laws declaring cryptocurrency legal. But they have failed and may not be constitutional if they do.) In 2020, a defendant who ran a bitcoin mixing service on the dark web claimed that this law did not apply to him because “bitcoin is not money.” In the United States, v. Harmon, a district court, rejected that argument. However, Bitcoin has several serious flaws for those seeking anonymity. In particular, Bitcoin creates a permanent public record of all transactions. Once a person is linked to an address, that person can be connected to other transactions through that address. Competing cryptocurrencies like Monero and Zcash now offer much better privacy. Faced with this situation, illegal activities are moving away from Bitcoin.

    FinCEN established its guidelines in 2013, stating that while virtual currency is a medium of exchange, it does not have all the attributes of a real currency, meaning it is not considered legal tender. That is, they state that as long as a customer is willing to accept it, anyone can use Bitcoin to buy goods and services. The Internal Revenue Service (IRS) describes virtual currencies (VC) as “a digital representation of value that acts as a medium of exchange, unit of account, and/or store of value [and] is not legal tender in any jurisdiction.” [4] Although electronic payment systems have been part of American life since at least 1871, when Western Union “introduced the transfer of money” by telegraph[5] and in 1914 “introduced the first consumer card,” virtual currencies differ from these digital payment structures because, unlike traditional digital transfers of value, Virtual currencies do not represent a claim of value; On the contrary, virtual currency is value. I don`t know who needs to hear this, but pump-and-dumps are illegal in crypto like any other marketplace and if you admit that you intentionally do them in a recorded live stream, you can expect the video to play for you as attachment A by @CFTC & @TheJusticeDept. Again, the current legal framework in most states provides few clear guidelines for using Bitcoin to play at online casinos – some of which now accept Bitcoin. The SEC`s efforts have focused on using blockchain assets as securities and protecting investors, such as whether or not certain Bitcoin investment vehicles should be sold to the public and whether a particular offer is fraudulent or not. For example, it depends on the agency to approve or reject an application for an exchange-traded fund (ETF) related to Bitcoin. But regardless of the legal uncertainty surrounding Bitcoin, many enthusiasts will tell you that no matter who says you can`t use Bitcoin, its decentralized nature ensures that no one can actually stop you. “I guess nothing will move legally until these investigations are completed, the assumption is that the existing legal framework is sufficient to adequately regulate the space at the moment,” Andres Guadamuz, a senior lecturer in intellectual property law at the University of Sussex, UK, told Decrypt. In the United States, the Internal Revenue Service (IRS) has shown increasing interest in Bitcoin and has issued guidelines. In 2014, the agency issued IRS Notice 2014-21 to provide information on the tax treatment of virtual currencies. Virtual currency is the term used by the IRS for cryptocurrency.

    For 2020, the IRS added a question on the first page of Form 1040 requiring taxpayers to indicate whether they are involved in virtual currency transactions. The digital currency known as Bitcoin was created in 2009 by a person or organization under the pseudonym Satoshi Nakamoto. Satoshi Nakamoto`s true identity has never been established. There are no physical bitcoins corresponding to dollar bills or euro banknotes. It exists only on the internet, usually in digital wallets. For example, legal parties cannot allow unauthorized parties to manage cryptography, in the same way that they cannot allow anyone else to manage traditional fiat currencies. Regulators aim to establish new guidelines for businesses that offer custody of crypto or otherwise manage digital assets.